Energy Bill

Debate between Nigel Adams and Dan Byles

Wednesday 19th December 2012 Commons Chamber

[Dan Byles]

A reasonable amendment, is it?

There are investors out there who want to invest in the UK. Members of the Energy and Climate Change Committee have spoken to them. I have personally spoken to numerous private equity companies and pension funds. There are billions of pounds sitting, burning holes in investors’ pockets, but they are holding back because they need to see the detail in the Bill. There are a number of issues that we kicked around in pre-legislative scrutiny on the Select Committee, around the counterparty and the detail of the contracts for difference. I am very pleased that DECC has moved considerably on the counterparty, and I think has taken on board many of industry’s concerns, but some still remain about exactly how the contracts for difference will work, where in the investment cycle those contracts will be awarded and the route to market for small generators.

[Nigel Adams]

Does my hon. Friend agree that the contracts for difference must be absolutely defined and clear to allow such investment to go ahead?

[Dan Byles]

Absolutely. My hon. Friend makes the point very precisely. In fact, most of the arguments about the counterparty were prompted by exactly that. The contracts need to be bankable. They need a robust and clear counterparty who, to be blunt, may be sued if necessary, and has deep enough pockets; and at the end of the day, that really means the Government. We know that the counterparty will be Government-owned. It is still not entirely clear whether it will be underwritten entirely by the Government, but those are some of the details that we shall be teasing out in the Public Bill Committee. These are the issues that investors are looking at.

There has been much discussion of the 2030 target. We discussed it at length in the Select Committee. Some investors out there are calling for it. We also had investors who came before the Committee who—even though some supported it—said, “For God’s sake, do not delay the Energy Bill by arguing about it, because in the short to medium term the 2030 decarbonisation target is not the key issue that investors are looking at as a driver for investment. The key issues are the details of electricity reform, the contract for difference, the counterparty and so on.”

Before I finish, I want to speak briefly about costs. I mentioned at the start that I do not believe that we can decarbonise at any cost, and to be fair I do not think that anyone in the Chamber would argue that we could. It is important that the decarbonisation agenda—a very important agenda, which I support—proceeds at a sustainable pace. I sometimes get concerned when, as a member of the Select Committee, sitting around the table with representatives of Government, industry and academia, I find myself thinking that there is an empty chair at that table—that of the consumer. We are not having enough of a conversation with Mrs Jones in Acacia avenue about what we are doing in this place, and the impact that will have on her electricity bills. Because let us face it: structurally higher energy bills not only have a wider cost to the economy, but every pound that Mrs Jones spends on her electricity bills, she is not spending in Comet—and look what happened to Comet. Higher energy bills have a dynamic impact on the economy, and we need to ensure that the decisions we make here do not unnecessarily add to those bills.

In summary, the Bill is vital. If we want to keep the lights on and attract the huge levels of investments that we need, we cannot be seen to be bickering in a partisan way in this place. We cannot hold up the Energy Bill arguing about a 2030 target. There are other opportunities to talk about that target; it is still a long way off. The Bill has managed to unite the CBI and RenewableUK in its support. That is quite a feat.

I echo the words of my hon. Friend the Member for Wealden (Charles Hendry), who is no longer in his place, by saying that this is not about a choice between renewables and gas. We need a balanced energy policy. We need gas and renewables and nuclear, and we need to decarbonise our electricity sector and, eventually, our entire economy, but at an affordable pace and an affordable rate.